Building momentum, one step at a time

I’m ramping up to coordinate my second Financial Peace University session for the year. The Spring session I had the privilege to coordinate was amazing, with 20 families completing the material and over a $100,000 turn around of their finances. It’s great to be able to be a part of a life-changing event for so many people.

If you’ve never taken Financial Peace University, I recommend it. It’s a great first step for families who are struggling with money issues and don’t know where to start. If you’re in the Tucson area, and you’re interested in joining a class, you’re all welcome to join mine.

We’ll be starting with a short orientation meeting for anyone interested in finding out more about FPU. We’ll be going over the class schedule and format, talk about what we expect from class members, how childcare will be handled, and answer any additional questions. That will happen on May 21st at 6:00 pm, and it shouldn’t last more than forty-five minutes.

The schedule breaks down as follows:

May 21 – Orientation

June 4 – Super Saving: Why you should save money, and why you need to start now.

June 11 – Relating With Money: Why families must work together to achieve financial goals.

June 25 – Cash Flow Planning: How to develop a monthly budget that really works.

July 2 – Dumping Debt: What myths we believe about debt, and how to become debt free.

July 9 – Buyer Beware: Why marketing is so powerful, and how to reduce it’s influence.

July 16 – The Role of Insurance: What insurance you need to have, and what to avoid.

July 23 – Retirement and College Planning: How to plan for the future.

July 30 – Real Estate and Mortgages: How to buy or sell a home.

August 6 – The Great Misunderstanding: Why you should live a generous life.

All meetings, including the orientation will be held at Saguaro Canyon Church at 10111 E Old Spanish Trail. Childcare is provided each time with a suggested donation.

This is the lesson that makes all of the difference. You can do everything covered up to this point, and it’ll work, but you won’t be half as successful as you could have been. How can generosity possibly play a part in building wealth? Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Lesson 9, The Great Misunderstanding

Key Points

The great misunderstanding is that we believe the way to have more money is to hold on to what we have tightly. The truth is that it’s just the opposite. When we hold our money with an open hand, instead of a closed fist, it’s able to flow out and in more freely. Generosity is a tool for wealth building.

We are not owners. We are only managers. We’re stewards. This is the hardest thing for us to accept. Everything we have is there for us tend, cultivate and grow, but not for ourselves.

Giving makes us more Christ-like. God is a giver. A spiritually mature Christian gives. If you have dedicated your life to following Jesus, but you’re not generous with what you’ve been given, you’ve missed something.

Challenges

The Parable of the Talents. From Matthew 25, and it has become one of my favorite passages. It covers the major points of how we need to approach money:

Everyone is given something, each according to their ability. There isn’t any room for envy. We each have what we can manage.

Grow what you’re given, no matter how small. Don’t bury it.

Be ready to give it all back to the one who gave it to you.

Being responsible with what you’re given right now prepares you for more in the future. In the end, how you grow what you’ve been given reflects on how you are growing. We all want to hear “Well done, good and faithful servant.”

This is only the beginning. You might still have months (or years) to go before you’ll see huge progress. Remember that you’re trying to be the tortoise, not the hare. Be committed to continue educating yourself about money. Read at least one financial book every year.

Making the right decisions when it’s time to buy or sell a home are a huge part of financial success. Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Lesson 8, Real Estate and Mortgages

Key Points

Be patient when buying a home. Think like an investor. Overlook bad and outdated features. Use experts to confirm the home’s value. The purchase of a house is a major financial event in our lives. Rushing through the process would be a mistake. Surround yourself with advisors to find a house that you will enjoy living in and will hold it’s value.

Never get more than a 15-year fixed mortgage, with at least 10% down. No more than 25% of your take-home pay in house payments. Being house poor is usually a worse fate than being in heavy credit card debt. Setting a specific upper limit to your purchase helps keep you from being in over your head.

When you get ready to sell your home, think like a retailer. You’re not selling someone a house, you’re trying to sell them their new home. Your home is now a product, show off its best features.

Once the debt is gone and you’ve put together an solid emergency fund, it’s time to start working on funding the future. Both for yourself and your children. Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Lesson 7, Retirement and College Planning

Key Points

Independence in the future is up to you. Work with investment advisors who have the heart of a teacher. You are responsible for funding whatever kind of future you want to have. Do not count on government programs or handouts to provide for you. Make a plan and start now.

The best way to invest is to be out of debt first. Work the Baby Steps. If you try to fund your future while trying to save for emergencies, put aside money for your kids college, and make all of your debt payments, well you’re not going to do any of those things well. Multitasking is a bunch of crap. Only work on one goal at a time until you’ve mastered it, and then move to the next step.

Don’t put all of your eggs in one basket. You must diversify. Spread your money around. You should never pile all of your wealth into one particular investment. The more you spread it around, the better your money will grow.

Fund college education only after you are fully funding your retirement. Your kids future in college may or may not happen. Your future (and your spouse’s) is definitely coming, and you need to be ready for it. There are a lot of options for your kids to fund their education, and it’s probably healthy to let them explore them as a part of the process.

Challenges

Can You Get a 12% Return? Investing is about long-term growth, and requires patience. Dave bases the 12% number on the average performance of the S&P over the past 80+ years (11.84%). Individual annual returns are going to fluctuate:

Based on 20 to 25 year averages, I feel 10% is more realistic, but ask me again in 5 years.

What’s Your Magic Number? How old are you going to be when you retire? Is 65 set in stone?

Consider Life-Long Work. If you are doing work that you love, why would you want to stop doing it? What does that do to the concept of retirement?

Say No To Student Loans. The average student graduates with $27,000 in loans (In 2011, it was $24,000, and in 2008 it was $18,000. Not a good trend). In most circumstances, these are NOT able to be bankrupted.

Is Education Changing? Almost everyone predicts that the next big economic bubble will be in education. At the same time, how we learn and what we need to learn has changed. Will the next decade do to the education industry what the last decade has done to the newspaper industry?